Windsor Corporation has retained earnings of $702,500 at January 1, 2017. Net income during 2017 was $1,426,500, and cash dividends declared and paid during 2017 totaled $83,200. Prepare a retained earnings statement for the year ended December 31, 2017. Assume an error was discovered: land costing $89,590 (net of tax) was charged to maintenance and repairs expense in 2014. (List items that increase retained earnings first.)

The end of the year balance in retained earnings after correction of prior period error is $2,135,390  

Explanation:

It is important to note that the error discovered has reduced retained earnings previously and by the time it is corrected retained earnings would increase by that amount of $89,590

Beginning retained earnings                     $702,500

net income for 2017                                   $1,426,500

dividends declared and paid in 2017         ($83,200)

correction of prior period error                   $89,590

Ending retained earnings                           $2,135,390